Lipstick on a pig: do layoffs make Nokia attractive for acquisition?

Nokia Corporation (NOK, quote) has announced it will cut 10,000 jobs worldwide. The layoffs did little for the Finnish company’s stock price, but it does make the company more attractive for acquisition by Samsung (SSNLFquote) or Microsoft (MSFTquote).

Image courtesy Darla Mack: http://www.everystockphoto.com/photographer.php?photographer_id=10214

Why buy a Lumia when you can buy the whole Nokia store?

Recent speculation that Samsung might buy Nokia sent Nokia’s stock soaring. The rally was brief, and the stock dropped another 17% last week.

To be an attractive acquisition, the takeover target must make the transaction as seamless as possible. For Nokia, being bought might be the most viable long term strategy for survival. Over the past year of trading, the company has fallen 54.91%. There are reports that it only has enough cash for 18 months of operation.

Nokia still has a lot of cash on its balance sheet, though – $3.29 a share in cash. The stock is trading in the range of $2.50, so an acquisition would cost Microsoft or Samsung very little.

Microsoft might have to move on Nokia to protect its Windows smartphone franchise – if for no other reason. Nokia also has over 10,000 patents. Court cases could entangle matters for years if a private equity company bought Nokia, sold its assets, and then prosecuted anyone infringing on those patents.

There are many who believe Microsoft would be foolish to buy Nokia. But there are also many reasons why Nokia is a good deal for Samsung or Microsoft, if the price is right.

Shedding 10,000 workers reduces expenses in the work force, and saves a potential buyer the hassle of getting rid of excess workers as part of the deal. 10,000 fewer workers is 10,000 fewer problems with unions and public relations. It will also make reducing labor costs easier in the future as it stands as a warning. Nokia may not be a very appealing place to work now, but it is a more attractive takeover target after these massive layoffs.